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2013 (11) TMI 845 - AT - Central ExciseClandestine removal of goods - Shortage of raw materials i.e. Ferro manganese and Ferro Molybdemum Held that - Shortages were worked out as per the records maintained by the appellant - The argument that the shortage could be due to burning loss, is not acceptable because burning loss of these raw materials will result only when these raw materials are heated with ferrous metals in furnace to make SS Billets - The burning loss cannot be take place at raw material stage. The contention of the appellant that difference in weight of raw material could be on account of moisture content in the raw material is also not justified and explained with the help of any documentary evidence - the moisture contain throughout the year will vary and will not make any difference in the overall weight recorded by the appellant - Appellants have therefore, could not explain the shortage of raw materials properly relying upon RUTVI STEEL & ALLOYS Versus COMMISSIONER OF CENTRAL EXCISE, RAJKOT 2009 (7) TMI 231 - CESTAT, AHMEDABAD - the burden of explaining the shortages is upon the assessees and Revenue is not required to show actual removal of raw materials. Penalty on Shri Pravin C. Jain Held that - He was fully aware of clandestine activities undertaken by M/s. Chandan Steel Limited and the shortages were not explained properly - He was aware of entire operations undertaken by the main company M/s. Chandan Steel Limited - Accordingly, penalty was correctly imposed upon him Decided against Assessee.
Issues:
1. Appeal against Order-in-Appeal passed by Commissioner (Appeals), Vapi 2. Confirmation of demand and penalty against M/s. Chandan Steel Limited 3. Imposition of penalty on Shri Pravin C. Jain 4. Appeal filed by M/s. Chandan Steel Limited against Order-in-Appeal 5. Allegations of removal/clearance of finished goods without payment of Central Excise duty 6. Show cause notice for duty demand and penalty proposal 7. Arguments regarding shortage of finished goods and raw materials 8. Discrepancies in grades of SS Billets 9. Explanation for shortages by the appellants 10. Burden of proof on the assessee for shortages 11. Imposition of penalty on Shri Pravin C. Jain Analysis: 1. The appeals were filed against two Order-in-Appeal passed by Commissioner (Appeals), Vapi, based on a common order in original issued by the adjudicating authority. A demand of Rs. 2,26,001/- was confirmed against M/s. Chandan Steel Limited, with a penalty imposed under rule 25 (1) of the Central Excise Rules, 2002. Additionally, a penalty of Rs. 10,000/- was imposed on Shri Pravin C. Jain, Vice President Commercial and Authorised Signatory of M/s. Chandan Steel Limited. 2. The second appeal was filed by M/s. Chandan Steel Limited against Order-in-Appeal No. 386/Vapi/2009, passed as a result of a previous order by CESTAT Ahmedabad. 3. The investigation revealed that the appellants had removed/cleared finished goods without paying Central Excise duty, leading to a demand of Rs. 2,26,001/-. Additionally, raw materials were cleared involving Central Excise duty of Rs. 1,28,401/-. 4. The appellant's representative argued that there was no shortage of finished goods and raw materials, explaining that some SS Billets were sent to another unit for processing. However, discrepancies in grades of SS Billets and lack of proper documentation raised doubts. 5. The department argued that the appellant failed to explain shortages adequately, citing previous case laws. The presence of moisture in raw materials was also addressed, disputing the appellant's claims. 6. The Tribunal noted the discrepancies in the appellant's explanations, emphasizing the importance of proper documentation and reconciliation during investigations. The burden of proof regarding shortages rested on the appellants, and penalties were upheld due to awareness of clandestine activities. 7. The appeals were rejected based on the observations made, affirming the demand, penalties, and decisions of the lower authorities. This detailed analysis covers the issues raised in the legal judgment comprehensively, highlighting the arguments presented by both sides and the Tribunal's final decision.
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